Aloha Air will pay
to get parts back

The mainland company that has been keeping some of Aloha Airlines' aircraft equipment hostage has agreed to release some of the parts for a $325,000 ransom.

Aloha's attorney Don Gelber informed the Bankruptcy Court yesterday that the airline has reached a deal with Auburn, Wash.-based Aero Controls Inc. in which Aloha will pay for the return of selected parts that Aero serviced before the carrier filed bankruptcy on Dec 30.

Gelber had filed a motion accusing Aero of contempt for forcing the airline to make pre-bankruptcy payments before Aero would return Aloha's equipment. Under bankruptcy law, creditors are barred from attempting to collect debt accumulated before a bankruptcy filing, unless approved by a court.

Aero had argued it had a maintenance agreement with Aloha to prepay for the parts and that Aloha should fully pay what it owes Aero and not be allowed to "cherry pick" selected parts.

"We have not held the parts hostage; Aloha has just failed to pay for the parts," Aero Chief Financial Officer Mary Ann Burns said in a declaration filing.

Two weeks ago, Aero attorney Tyler Firkins claimed Aloha had defaulted on about $700,000 of maintenance payments since the bankruptcy and that Aloha owed Aero about $1.5 million.

Gelber said yesterday he disagreed with Firkins' statements.

Firkins declined yesterday to answer any questions. He previously said Aloha had forwarded Aero "lots of parts" to repair following the bankruptcy filing and that Aero had not been paid a cent.

Gelber said Aloha is now using other parts suppliers for maintenance and the airline has not sent Aero any parts since filing for bankruptcy.

When asked about the parts again yesterday, Firkins refused to comment.

Burns said in her declaration that Aero had continued to process open repair orders, pay third-party vendors and send Aloha outstanding invoices. She said Aero President John Titus has been forced to loan Aero $600,000 so it can meet payroll and pay its vendors.

Gelber asked the court yesterday to postpone the contempt motion against Aero in light of Aero's agreement to return selected parts.

Aloha earlier paid Aero about $628,000 under two separate parts-leasing contracts for equipment leased from Aero since the start of the year.